The United States and Britain claim to be handing sovereignty to Iraq next week. In fact, the occupying power cannot legally transfer sovereignty on June 30 for one simple reason: it does not possess it. Sovereignty is vested in the Iraqi people, and always has been: before Saddam Hussein, after him, under the martial law of the American proconsul Paul Bremer today.

This fact is reflected in the language of the most recent UN resolution - 1546, on June 8 - as well as previous ones, all of which "reaffirm the sovereignty and territorial integrity of Iraq". The constant need of George Bush and Tony Blair to claim sovereignty reflects more than a misunderstanding of the laws of war and basic international law. It demonstrates an alarming ignorance of the democratic structures of the very countries they were elected to represent. This ignorance also provides us with some clues as to why they have no understanding either of what they are doing in Iraq, or what is happening on the ground there.

When the formal apparatus of a state crumbles during invasion and occupation, and authority is exercised by a foreign military power, sovereignty returns to its bearers, a country's citizens. Sovereignty is vested in the people, and not in the apparatus of state. This is the fundamental principle from which modern democracies draw their legitimacy, and the basis for all representative government. It is also the cornerstone of modern international law.

This doctrine of popular sovereignty has been set out in classical texts and in the modern era, most famously by philosophers such as John Locke, Jean Jacques Rousseau and John Stuart Mill. It can be seen in the constitutions and founding documents of the French and American revolutions, and of representative international institutions such as the UN.

Yet these are not abstract theories of state. They reflect a solid custom of political engagement that dates from the emergence of democratic systems in 18th-century Europe. It is only because of this custom of resistance and the collective practices of popular sovereignty by generations of ordinary people that these principles are now embedded in every democratic legal system and governing institution. It is from this tradition of resistance to unrepresentative rule that Europe draws its own democratic culture, its notion and practice of citizenship, public space and political activism, and the role and responsibilities of the state.

It was the principle of popular sovereignty that was fought for by generations of Europeans from the late 18th century and throughout the 19th in order to establish democracies in the face of foreign military conquest and imperial rule. It was equally this principle that guided the actions and legitimacy of the underground resistance and the allies in the second world war, and it is the very same principle that guides the resistance today in Palestine and Iraq. Democracy is a product of these struggles, and moreover this historical practice is itself the essence of popular sovereignty in action, its very articulation.

The quest for representative government was at the heart of the battle against a variety of unrepresentative regimes in 19th-century Europe: the Polish struggle for emancipation against the Russian and Prussian armies in the 18th and 19th centuries; the Russian partisans who fought Napoleon's army and later the Nazi invaders; Italian republicans such as Mazzini and Carlo Bianco who fought underground with republican associations for more than 30 years against the Austrian empire and the papal states; the popular resistance in India to British rule; the political and military resistance in South Africa. All characterise a single political tradition, that of popular sovereignty.

These customs of active engagement by citizens to free and rule themselves illustrate two important historical lessons that tie us to the present relationship between an occupier and an occupied people. The first is that the struggle for liberty is universal, not imported, and emerged from concrete historical conflicts. The second is that today's democratic institutions are the product of these very struggles.

The most important lesson of our common history is that those organised political engagements against injustice are what created the political culture that ensured the stability of the democratic institutions that emerged.

It is not only after one possesses democratic institutions that one practices democracy, nor is democracy merely a set of institutions or mechanisms such as elections. Democracy only holds if it emerges by customary practice in the public sphere, and in the case of Europe this custom developed through organised resistance to unrepresentative rule over generations.

So the popular struggle for liberty has been, in the case of established democracies in Europe, the necessary route to gain those liberties, and to hold them. All the rights enjoyed today across Europe were hard won by political mobilisation, imprisonment and armed resistance, by organisational structures working underground for a common purpose at great risk over generations.

This common purpose did not emanate from above, from bureaucrats or technocrats, from the minds of political theorists or commentators, from the "transfer" of democratic ideas, liberal armies or even Rousseau.

The young men who defended Jenin refugee camp in the West Bank and Rafah refugee camp in Gaza, and who recently won back the Iraqi cities of Falluja and Najaf from the occupying power, are not the terrorists - or the enemies of democracy. They are our own past torchbearers, the founding citizens of popular sovereignty and democratic practice, the very tradition that freed Europe and that we honoured on D-day.

· Karma Nabulsi is a research fellow at Nuffield College, Oxford. Her book Traditions of War: Occupation, Resistance and the Law is published in paperback this summer by OUP